On the Interaction between Player Heterogeneity and Partner Heterogeneity in Two-Way Flow Strict Nash Networks

15 Pages Posted: 15 May 2015

Date Written: May 15, 2015

Abstract

This paper brings together analyses of two-way flow Strict Nash networks under exclusive player heterogeneity assumption and exclusive partner heterogeneity assumption. This is achieved through examining how the interactions between these two assumptions influence important properties of Strict Nash networks. Built upon the findings of Billand et al (2011) and Galleotti et al (2006), which assume exclusive partner heterogeneity and exclusive player heterogeneity respectively, I provide a proposition that generalizes the results of these two models by stating that: (i) Strict Nash network consists of multiple non-empty components as in Galleotti et al (2006), and (ii) each non-empty component is a branching or Bi network as in Billand et al (2011). This proposition requires that a certain restriction on link formation cost (called Uniform Partner Ranking), which encloses exclusive partner heterogeneity and exclusive player heterogeneity as a specific case, is satisfied. In addition, this paper shows that value heterogeneity plays a relatively less important role in changing the shapes of Strict Nash networks.

Keywords: Network Formation, Strict Nash Network, Two-way Flow Network, Branching Network, Agent Heterogeneity

JEL Classification: C72, D85

Suggested Citation

Charoensook, Banchongsan, On the Interaction between Player Heterogeneity and Partner Heterogeneity in Two-Way Flow Strict Nash Networks (May 15, 2015). FEEM Working Paper No. 44.2015, Available at SSRN: https://ssrn.com/abstract=2606536 or http://dx.doi.org/10.2139/ssrn.2606536

Banchongsan Charoensook (Contact Author)

Keimyung University ( email )

Dalseo-Gu, Daegu 704-701
Korea, Republic of (South Korea)

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